Closed Company with Intercompany accounts

Hi ​@kbilyeu 

Our procedure before closing a company/branch is as follows:
+ Clear the company/branch's Cash Accounts balance.
+ Clear the company/branch's Accounts Receivable/Accounts Payable (AR/AP) balance.
+ Clear the company/branch's inventory.
+ Dispose or transfer the company/branch's fixed assets to another company/branch
+ Clear all Deferred Revenue (Revenue & Expense) of the company/branch.
+ Delete Account Mapping related to that company/branch.

Best Regards,

NNT

Hello ​@kbilyeu 

I agree with ​@nhatnghetinh.  When a company is closed, lawyers, CPA’s, the CFO and the company accountants work together to enter proper closing transactions.

When all transactions are completed, de-Activate any Warehouse associated with the Branch/Company, then deactivate the Branch/Company.

Laura 

Thank you for your responses.  These are very helpful, however I should have stated that the balance sheet has been cleared except for intercompany accounts.  Entities are linked via intercompany mapping, so I am trying to understand how to clear the enter company accounts through retained earnings.  Do I need to deactivate/disconnect the closed entity from intercompany mapping in order to clear these accounts to retained earnings?

Hello,

Thank you for the new information; it’s very helpful.

It’s a quandry:  If the intercompany relationship is removed, GL Transactions screen won’t allow you to post one line to Closed Company Due to/from accounts, and the opposite side of the entry to Retained earnings for your Other Entity. However, if the intercompany relationship is not removed, the attempt to clear out intercompany accounts may generate additional entries to Due To/From. One suggested solution is below.

Ask your CPA exactly what accounts should be used in this entry.  Ask your CPA to check my example entry for correct debits and credits.

Example:

1. Remove inter-company relationship.
2. Debit or credit Due To and Due From (Other Entity) accounts in Entity 2/Closed Company.  Suppose the difference is $150 Credit. 
3. Post the opposite side of the entry from step two ($150 debit) in a new account, like “Transfer balance of Closed Company to Other Entity.”  
4. In Other Entity, the Company whose Retained Earnings will absorb the entries from Closed Company, post the same amount from step 3 to Retained Earnings ($150 credit).  Post the opposite side of this entry in Other Entity ($150 debit) to an account recommended by your CPA, such as Expense account called “Absorb difference from Closed Entity”.

Good luck!